Class Action

In his confirmation hearing, Justice Scalia told the Senators that, as a law school student, he had never really understood antitrust law; later, he learned that he shouldn't have understood it, because it did not make any sense then. It should come as no surprise, that in his subsequent time on the Court, Justice Scalia strove to rectify that problem, and succeeded through clearly written majority decisions that changed the direction of jurisprudence on monopolization (U.S. v. Trinko) and class certification in massive antitrust and other business class actions (Wal-Mart v. Dukes, Comcast v. Behrens), and powerful dissents. As a modern intellectual leader of the "Chicago school" of economics, Justice Scalia played an important role in shaping the Court's approach to antitrust law and hence development of the law in the lower courts. It is a good time to consider the impact of his legacy, including how lasting those decisions will be, whether and how the course of antitrust jurisprudence could change and who will take his place in the Court on these issues.

This panel was held on November 17, 2016, during the 2016 National Lawyers Convention in Washington, DC.

In a 6-2 decision issued on Monday, May 16, the United States Supreme Court vacated and remanded Spokeo, Inc. v. Robins for re-argument in the Ninth Circuit Court of Appeals. Thomas Robins filed a suit under the Fair Credit Reporting Act against Spokeo, a company that operates a “people search engine,” for publishing incorrect information about him, information that he claimed harmed his employment prospects by falsely making him appear overqualified for the types of employment he was seeking at the time. The Supreme Court rejected the Ninth Circuit’s analysis finding that Mr. Robins had standing to sue, and instructed the Ninth Circuit to consider the question again. Spokeo raises big questions about big data, class action litigation, and the legitimacy of certain statutorily authorized private rights of action. Our expert offered his analysis of the opinion, the case’s prospects going forward, and its potential broader impact on the law.

On January 25, 2016, the Supreme Court decided Amgen Inc v. Harris without oral argument. Former employees of an Amgen subsidiary had participated in a benefit plan that offered ownership of Amgen stock. When the value of Amgen stock fell in 2007, stockholders filed a class action against plan fiduciaries alleging a breach of fiduciary duties, including the duty of prudence, under the Employee Retirement Income Security Act of 1974. Although the U.S. Court of Appeals for the Ninth Circuit initially reversed a district court decision dismissing the class action complaint, the U.S. Supreme Court then vacated the Ninth Circuit’s judgment and remanded the case in light of the Supreme Court’s then-recent decision Fifth Third Bancorp v. Dudenhoeffer, which set forth the standards for stating a claim for breach of the duty of prudence against fiduciaries who manage employee stock ownership plans.

On remand, the Ninth Circuit reiterated its conclusion that the plaintiffs’ complaint stated a claim for breach of fiduciary duty, and the Supreme Court again granted certiorari. In a per curiam opinion the Court reversed the judgment of the Ninth Circuit by a vote of 9-0, holding that the Circuit had failed to properly evaluate the complaint. In its current form, the Supreme Court concluded, the complaint failed to state a claim for breach of the duty of prudence. In remanding the case, however, the Court indicated that the district court could decide in the first instance whether the stockholders might amend their complaint in order to adequately plead a claim for breach of the duty of prudence.

To discuss the case, we have George T. Conway III, who is Partner, Litigation at Wachtell, Lipton, Rosen & Katz.

On November 10, 2015, the Supreme Court heard oral argument in Tyson Foods v. Bouaphakeo. Peg Bouaphakeo and the rest of the plaintiffs in this class action are current and former employees of Tyson Foods. They claim that Tyson violated the Fair Labor Standards Act by not paying them for time spent putting on and taking off protective clothing at the beginning and end of the work day and before and after lunch. The district court certified the class, and the jury returned a multi-million dollar verdict in their favor. Tyson argued on appeal that certification was improper due to factual differences among plaintiffs, but the U.S. Court of Appeals for the Eighth Circuit affirmed the district court.

The questions before the Supreme Court are twofold: (1) Whether differences among individual class members may be ignored and a class action certified under Federal Rule of Civil Procedure 23(b)(3), or a collective action certified under the Fair Labor Standards Act, where liability and damages will be determined with statistical techniques that presume all class members are identical to the average observed in a sample; and (2) whether a class action may be certified or maintained under Rule 23(b)(3), or a collective action certified or maintained under the Fair Labor Standards Act, when the class contains hundreds of members who were not injured and have no legal right to any damages.

To discuss the case, we have Karen Harned, who is Executive Director of the National Federation of Independent Business Legal Center.

In this class action case, counsel for the plaintiffs received over 94% of the total cash recovery provided for in settlement – while the attorneys received $5,680,000 in fees, the millions of class members realized only $344,850. Objector Ted Frank’s petition for cert in the U.S. Supreme Court is pending. The petition essentially asks whether such an award is fair, reasonable and adequate under the Federal Rules of Civil Procedure. What will this case mean for the future of cy pres and class action litigation?